Nigel Brook, Global Head of Reinsurance, Clyde & Co
Please give us some background information on yourself and how your organisation plays a leading role in the climate risk agenda.
I head up Clyde & Co's reinsurance team and lead our global campaign on Resilience and Climate Change Risk. I am also on the firm's Innovation Board and a co-founder of Clyde Code, our smart contracts consultancy.
Clyde & Co's Resilience campaign seeks to raise awareness of climate-related legal duties and potential liabilities. We have produced a number of reports and hosted events on these topics, and have set up a cross-disciplinary team that looks at these issues and provides support and advice to our clients.
We have also looked at the way the insurance industry is seeking to help close the global protection gap – the gap between insured and uninsured losses – particularly in the developing world, through innovative public-private partnerships, technology and forms of risk transfer. The (re)insurance industry is particularly impacted by climate change and has a key role to play in solutions to climate risk and resilience.
How do you see climate change affecting your organisation/the organisations you work with?
Our non-insurance clients face an array of new and fast-changing legal and liability risks and our insurance clients have to grapple with how they cover these new and emerging exposures and how existing policies might be called upon. On the asset side, they are increasingly scrutinising their investments to determine whether they are ready for the transition to a low-carbon economy and some are seeking ways to support green investments and resilient infrastructure. A growing number of regulators and investors are pushing for greater and more comprehensive disclosures of climate risk, and regulated entities and others are working to understand and map their climate risk exposures.
How should companies manage climate-related risks?
Boards have a responsibility to shareholders and other stakeholders to understand, measure, mitigate and report on the risks that climate change brings, which makes it a critical boardroom issue and a possible legal risk not only to the corporations themselves, but to their directors and officers.
What will you be discussing at The Economist’s Climate Risk Summit?
I will be part of the debate with the CEO of Client Earth, an activist law firm pursuing strategic climate litigation against corporates and others. The question is whether climate change should be fought in the courts. Our positions will be polarised for effect. We are all agreed that action on climate is necessary, but the form it takes and whether courts are the right forum, is another question and very jurisdiction-dependent, too. The problem is big, the solutions myriad and the tools various. It is really an age-old question about the role of the legislature versus the role of the Courts and the power, authority and limitations of both.
What’s the one thought you would like attendees to take away with them from the Climate Risk Summit?
Climate change risk is a business risk and potentially gives rise to liability risk, but there are ways that companies and their directors and officers can understand, map and mitigate their exposures.
What are the biggest risks facing businesses when it comes to facing/dealing with climate change?
At the moment, the biggest and overarching risk is not understanding or appreciating that climate change risk is a business risk. Most companies are vulnerable to climate-related risks in some way, even if they are not in the energy sector or other carbon-intensive parts of the economy. Some have already started on the journey to understanding and disclosing their climate risk, for example through Task Force on Climate Related Financial Disclosure-recommended disclosures, but more will need to be done to integrate climate risk planning and adaptation into business strategies going forward.
How have businesses' attitudes towards the management of climate risks changed in the last few years?
Clyde & Co has been looking at climate change risk in depth since Mark Carney's Tragedy of the Horizon speech at Lloyd's four years ago. Over that period we have seen a sea change in engagement with this issue at a senior level in certain sectors, along with a sharp uptick in concerted investor activism. The challenge is vast, and there's plenty left to be done – you need only look at the TCFD's 2019 status report – but there is now real momentum. More and more companies want to understand and manage the climate-related physical, transition and liability risks that they could face.